What Is A Division 7A Loan Agreement

If the private company has more than one merger loan, each amalgam loan will be considered separately. Loans cannot be pooled to calculate a minimum annual repayment. For each merged loan, there will be a minimum annual repayment. During the 2016 revenue year, XYZ Pty Ltd pays the fuel costs of a vehicle owned by shareholder Sally. Sally has no obligation, express or implied, to repay the amount. Unless Sally converts the payment into a compliant loan, the payment provisions of Division 7A will apply. As a business, you may have legitimate reasons to lend money to a shareholder or your partner. It`s important to make sure you understand the possible tax consequences. More importantly, a simple “loan agreement” may not be enough. You should consider making the agreement and preparing a Division 7A loan agreement. If you have any questions about Division 7A credit agreements, contact LegalVision`s tax lawyers at 1300-544-755 or fill out the form on this page. .